US president Donald Trump threatened to enact a 200 per cent tariff on European wine, champagne and other alcoholic beverages, the latest escalation in a brewing trade war between the US and the EU.
The president in a social media post on Thursday said that he would move forward with the import duties if the EU doesn’t repeal a tax on US whiskey, a measure put in place to retaliate against Trump’s steel and aluminium tariffs that went into effect on Wednesday.
“If this Tariff is not removed immediately, the U.S. will shortly place a 200 per cent Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES,” Trump said about the levies on whiskey. “This will be great for the Wine and Champagne businesses in the U.S.”
The threat, if it was put into action, could be a huge problem for Irish whiskey makers, with the US long seen as the key market for their exports. Industry exports topped €1 billion last year, according to trade group Drinks Ireland.
“The imposition of tariffs will impact on our businesses and our consumers,” Irish Whiskey Association director Eoin Ó Catháin said in a statement. “Having our sector implicated in this dispute puts jobs, investments and businesses at risk and has the potential to be devastating for Irish whiskey,” he added.
Shares in European makers of alcoholic beverages fell, with LVMH, which owns champagne houses Moët & Chandon and Veuve Clicquot, down as much as 2.2 per cent. Cognac producer Remy Cointreau dropped 4.5 per cent and spirits maker Pernod Ricard declined 3.6 per cent.
The EU is planning countermeasures to Trump’s metals tariffs with duties on up to €26 billion worth of American goods. The EU will also immediately begin consultations with member states, with the aim of adopting the additional lists of agricultural and industrial goods subject to tariffs as high as 25 per cent by mid-April.
Trump has also pledged yet another round of tariffs in just three weeks, saying he’ll begin rolling out reciprocal duties. The White House plans to apply an across-the-board rate to each country, based on a calculation of their own tariffs and other trade barriers, such as digital taxes or value-added levies.
That threatens to further ignite the trade war, forcing countries to retaliate in ways that could spur Trump to add more levies of his own under the mantle of reciprocity. The president is also pledging separate sectoral tariffs on industries including autos, lumber, semiconductors, pharmaceutical drugs and copper.
The president has enacted his sweeping tariff agenda in a piecemeal faction, a strategy that has been punctuated by uncertainty, including delays, reversals and changes in direction. Trump on Tuesday threatened to double a forthcoming tariff on Canada and backed down hours later when Ontario paused an export surcharge on electricity.
The use of tariffs as leverage in economic and geopolitical disputes is weighing on markets. The S&P 500 Index has dropped nearly 10 per cent from a February high, raising fears of a recession. On Wednesday, US markets made some gains after weeks of turmoil and losses.
Trump – who during his first term, repeatedly touted stock surges as validation of his policies – has shrugged off the fallout, saying this week the sellof was a buying opportunity and necessary to remake American industry and supply chains. Support for his tariff barrage is tepid at best, with many industry groups urging exemptions and economists warning of cascading fallout across the economy.
Trump during his first term pledged to enact sweeping tariffs on French wine over Paris’ tax posture toward US technology companies, but later retreated from that threat after he reached a truce with French president Emmanuel Macron. – Bloomberg
